In late middle and early high school, I would spend a lot of my time watching documentaries and listening to podcasts about the meat and dairy industry in the United States. I found the intense hold they had over our government and our food choices fascinating. Our readings and lectures on rent seeking and capture theory made me realize that this is exactly what is going on. “Big Meat” (the name given to the meat industry) spends huge sums of money on lobbying every year to ensure their place in the US economy, even when the outcomes are inefficient. In June of 2018, Missouri passed a law that banned meat alternative brands from using words like “meat”, “beefy”, “sausage” to name or describe their products. Industry giants like Tysons and Perdue and major meat industry lobbyists were backers of the bill. South Dakota, Mississippi, Wyoming, and Louisiana followed suit shortly after. In Arkansas, the word “veggie burger” is banned. Laws like this are as a result of rent seeking and could be looked at as a form of capture theory (control over substitutes). Brands like Impossible Foods and Beyond Meat argue that their product is best advertised and described to consumers using the very words they are now banned from using. This could result in slipping sales for meat alternatives as confused customers turn to what they know - plain old meat. Stigler points out that the most effective way for an industry to ensure long run profits is to have barriers to entry. Legislation like this could be seen as a barrier to entry for new meat alternative brands. With limited ability to advertise accurately, potential new businesses might choose to quit before they even try.
This comes on the heels of falling meat sales and skyrocketing popularity for meat alternatives, especially as major fast food chains start to add them to their menus (Burger King’s Impossible Whopper). According to many surveys, the American public is becoming more aware of the extremely damaging effects of livestock, especially cows, on the environment. 14.5% of all emissions come from cows and ⅓ of the world’s arable land is used to raise livestock. Furthermore, many Americans now actively try to limit their (red) meat consumption for health purposes.
In class, we learned that rent seeking is the diversion of resources from valuable places and instead spent on activities that have negative social value. In 2018, the animal agriculture industry spent $18 million on lobbying and $22 million on campaign contributions. This rent seeking money in order to keep profits up is being diverted from productive uses. This is money that could be used to find climate solutions or money that could be put into transitioning livestock land into land that grows soybeans (used in meat alternatives and reduces emissions significantly). Instead, it is being pumped into an industry that is arguably fading somewhat in relevance.
1 comment:
The meat industry's rentseeking is one where I see a much larger deadweight loss than in other cases. Meat consumption has been linked to heart disease, which costs the US more than $219 billion annually in medical expenses. Heart disease is not the only health concern which meat consumption creates, so it's clear that Big Meat has a huge hold on our political system, that our representatives would not stand up for the health of 300 million people by allowing meat alternatives to advertise freely. The question this raises in my mind is the question of what lines could be drawn to prevent such large deadweight losses. The first thing that comes to mind is some form of restriction on lobbying spending that a company/industry can expend that could reduce the deadweight loss, but more solutions may be necessary to dethrone Big Meat.
(As a less important note, since 70% of soybeans in the US are grown to feed livestock, as we transition to meat alternatives, it's not likely that we would need any more soybean crops. In fact, it's possible that soybean farmers would want to protect the meat industry, as a cow would eat more soybeans per burger than creating the burgers from soy directly. That means that farmers rely on the demand of the meat industry, so soybean farmers would not be likely to grow their businesses in the transition to meat alternatives. That actually means that the soybean farmers could support Big Meat's rentseeking efforts, which provides further evidence for the power of that industry.)
Post a Comment